publication). See also Doe, 729 F. Supp. at 386-87 (voluntary communication of personal information for "selective" purpose may undermine common law privacy claim but does not defeat § 1983 privacy action for inappropriate disclosure by recipient to others).
Congress has prohibited the disclosure of information relating to the "amount or source of any income, profits, losses or expenditures of any person" by a federal agent which he obtained during the course of an investigation or in the performance of his official duties. 18 U.S.C. § 1905. See also 5 U.S.C. § 552(b)(4) (protecting from disclosure by federal agencies generally confidential personal financial information in its files); 15 U.S.C. § 78u(h)(1) (generally making Right to Financial Privacy Act applicable to SEC); 17 C.F.R. § 230.122 (limiting disclosure of non-public information obtained by SEC agents in course of investigation). The Third Circuit cited the Privacy Act
and regulations governing access to personal information held by federal agencies in recognizing a privacy interest of employees in personal information contained in their employer's records. Westinghouse, 638 F.2d at 576-77.
In the instant case, plaintiff had no legitimate expectation that records of financial institutions reflecting his transactions or worth would be cloaked with "an impenetrable veil of privacy in all contexts." Young, 882 F.2d at 636. When he engaged in communications or transactions with financial institutions and implicitly consented to their maintenance of records reflecting his personal affairs, however, plaintiff reasonably may have expected that this information could be acquired and disclosed by government agents only as provided by law. It would be reasonable for him to expect that financial records obtained by a government agent in connection with an investigation would be "used only for the purpose for which they were originally obtained," see 12 U.S.C. § 3413(h)(4), and disclosed only for the purposes delimited by the Right to Financial Privacy Act. He retained a legitimate, if limited, expectation of privacy in information derived from records of financial institutions pertaining to his relationship with them, see 12 U.S.C. § 3401(2), sufficient to protect against gratuitous disclosure by a government agent to a private party for her use in pursuing her personal objectives.
Plaintiff has set forth a Bivens claim against defendant Heffernan for invasion of privacy sufficient to withstand a motion to dismiss.
B. Request for Injunctive Relief
Plaintiff seeks to enjoin permanently the SEC investigation, which he alleges is causing him irreparable harm and depriving him of his constitutional rights. Defendants contend that the court lacks subject matter jurisdiction to enjoin an SEC investigation and that plaintiff has failed to state a cognizable claim for injunctive relief.
To obtain injunctive relief, a party must show that he faces irreparable injury, that there are no adequate legal remedies, that the balance of any competing claims of injury weighs in his favor and that granting such relief is not contrary to the public interest. Public Interest Research Group, Inc. v. Powell Duffryn Terminals, Inc., 913 F.2d 64, 82 (3d Cir. 1990), cert. denied, 498 U.S. 1109, 112 L. Ed. 2d 1100, 111 S. Ct. 1018 (1991). A party may not obtain a permanent injunction upon a showing of potential harm, but rather must show that an actual threat of harm exists. McLendon v. Continental Can Co., 908 F.2d 1171, 1182 (3d Cir. 1990).
Plaintiff relies on the Fifth Amendment guarantee of due process of law as the basis for jurisdiction and cites the Administrative Procedures Act ("APA"), 5 U.S.C. §§ 701-706 (1977 & supp. 1994), for the appropriate standard of review of agency actions. Section 704 of the APA, however, limits court review to final agency actions. In the absence of finality, a district court lacks jurisdiction to review agency action. Veldhoen v. United States Coast Guard, 35 F.3d 222, 225 (5th Cir. 1994).
Defendants correctly contend that a decision to initiate an investigation is interlocutory in nature and generally is not subject to judicial review under the APA. See Federal Trade Comm'n. v. Standard Oil of California, 449 U.S. 232, 239, 66 L. Ed. 2d 416, 101 S. Ct. 488 (1980); Blinder, Robinson & Co. v. Securities & Exchange Comm'n., 692 F.2d 102, 106 (10th Cir. 1982). There are, however, limited exceptions to the final agency action doctrine. The Third Circuit has declined to require exhaustion "when the challenged agency action presents a clear and unambiguous violation of statutory or constitutional rights, ... when resort to administrative procedures is 'clearly shown to be inadequate to prevent irreparable injury,' or when exhaustion is 'futile.'" Susquehanna Valley Alliance v. Three Mile Island, 619 F.2d 231, 245 (3d Cir. 1980)(citations omitted); First Jersey Sec., Inc. v. Bergen, 605 F.2d 690, 696 (3d Cir. 1979).
Defendants also correctly contend that there is an absence of judicially-manageable standards by which to review SEC investigative actions. Sections 21(a) and (b) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78(u)(a) and (b), give the SEC considerable discretion in determining when and how to investigate possible violations of the statute. Securities & Exchange Comm'n. v. Jerry T. O'Brien, Inc., 467 U.S. 735, 745, 81 L. Ed. 2d 615, 104 S. Ct. 2720 (1984). The pertinent law and regulations do not contemplate or provide objective or manageable criteria to review an exercise of discretion by the SEC as to whom and how to investigate. See Treats Internat'l. Enter. v. Securities & Exchange Comm'n., 828 F. Supp. 16, 18 (S.D.N.Y. 1993). Even in the absence of such standards or criteria, however, federal courts should generally exercise jurisdiction when an agency action violates an individual's constitutional rights. See Webster v. Doe, 486 U.S. 592, 603-04, 100 L. Ed. 2d 632, 108 S. Ct. 2047 (1988); Local 2855, AFGE v. United States, 602 F.2d 574, 580 (3d Cir. 1979)("Even when a court ascertains that a matter has been committed to agency discretion by law, it may entertain charges ... that the decision violates a constitutional ... command."); Lyle v. Sivley, 805 F. Supp. 755, 758 (D.Ariz. 1992).
Plaintiff concedes that the decision of the SEC to investigate whether he engaged in insider trading is lawful. He has asserted conclusively but has alleged no facts to show that the alleged disclosure to Doe has vitiated the investigation or prevents the SEC from reaching a reasoned conclusion based on pertinent evidence about whether plaintiff violated the law.
Plaintiff has not alleged any facts to suggest a likelihood of future unauthorized disclosures of investigatory information and apparently cannot do so as the parties agree that Mr. Heffernan has been removed from the investigation. Plaintiff's assertion that he will suffer irreparable harm to his reputation and business prospects as well as emotional distress cannot support the injunctive relief he seeks.
There is no constitutional right not to be investigated for suspected violations of federal law by an agency authorized by Congress to conduct such investigations in its discretion, or not to be injured in one's reputation or business prospects as a consequence of such an investigation. See Federal Trade Comm'n. v. Standard Oil of California, 449 U.S. 232, 244, 66 L. Ed. 2d 416, 101 S. Ct. 488 (1980); Paul v. Davis, 424 U.S. 693, 709-12, 47 L. Ed. 2d 405, 96 S. Ct. 1155 (1976); Hannah v. Larche, 363 U.S. 420, 443, 4 L. Ed. 2d 1307, 80 S. Ct. 1502 (1960); Sturm v. Clark, 835 F.2d 1009, 1011-13 (3d Cir. 1987). Virtually anyone under investigation, however innocent or confident of vindication he may be, will sustain emotional distress. If this were a ground for enjoining an investigation, virtually no investigation of suspected wrongdoing could ever be completed.
There is a substantial public interest in permitting a federal agency to exercise its statutory duties. See Securities & Exchange Comm'n. v. Management Dynamics, Inc., 515 F.2d 801, 808 (2d Cir. 1975). The harm to the SEC in its ability to fulfill its mission generally and with regard to Independence if an injunction were granted outweighs the harm alleged by plaintiff, the type of harm which necessarily accompanies many official investigations.
Plaintiff has not alleged facts from which it appears that his constitutional rights will be violated or threatened if the SEC investigation is permitted to continue to its conclusion. It follows that the court lacks subject matter jurisdiction to entertain a request to review and enjoin the investigative actions of the SEC in this case.
Plaintiff's due process and injunctive claims will be dismissed. The motion to dismiss plaintiff's Bivens privacy claim against defendant Heffernan for the alleged disclosure to Jane Doe will be denied.
An appropriate order will be entered.
AND NOW, this 15th day of March, 1995, upon consideration of defendants' Motion to Dismiss Amended Complaint and plaintiff's response thereto, consistent with the accompanying memorandum, IT IS HEREBY ORDERED that said Motion is GRANTED as to plaintiff's due process and injunctive relief claims which are DISMISSED and DENIED as to plaintiff's privacy claim for damages against defendant Heffernan.
BY THE COURT:
JAY C. WALDMAN, J.